RBI launches 5 years “Financial Inclusion Strategy”

It aims to promote financial literacy among customers

• The Reserve Bank of India has launched National Strategy for Financial Inclusion (2019-24)
• The main motive of the strategy is to provide access to financial services in an affordable manner
• The strategy was launched based on the recommendations of the Financial Inclusion Advisory Committee

Highlights of the launch of strategy

• The strategy was launched based on the recommendations of the Financial Inclusion Advisory Committee that worked in consultation with the following agencies
• SEBI (Securities Exchange Board of India), PFRDA (Pension fund Regulatory and Development Authority of India) and also Insurance Regulatory and Development Authority of India (IRDAI)
• The plan aims to provide basic financial services — savings account, credit, micro-life and non-life insurance products, pension product, and a suitable investment product — to every eligible adult
• To achieve this, every adult enrolled under the Pradhan Mantri Jan Dhan Yojna should be enrolled under an insurance scheme and pension scheme by March

Key highlights of the strategical recommendations

• The report has called for increasing outreach of banking outlets of scheduled commercial banks, payment banks, among others to provide banking access to every village within a 5 km radius of 500 households in hilly areas by March 2020
• The committee has recommended for the strengthening of Digital Financial Services to reach a less-cash society by 2022
• Every adult registered under Pradhan Mantri Jan Dhan Yojana should be enrolled in pension scheme and insurance scheme
• The new entrants to the financial system — eligible and willing to undergo any livelihood/skill development program — may be given the relevant information regarding government livelihood programs to help them augment their skills
• The customers have to be made aware of the recourses available for grievance resolution
• Adequate safeguards also need to be ensured to store and share customers’ biometric and demographic data, so that their Right to Privacy is protected
• It has been recommended to devise a customer grievance portal or mobile application that will act as a common interface for lodging, tracking, and redressal of grievances pertaining to the financial sector, collectively by all stakeholders
• It has also been advised that there should be co-ordination between all stakeholders

What is “Financial Inclusion Advisory Committee”?

• The Reserve Bank of India has constituted a high level Financial Inclusion Advisory Committee (FIAC) to spearhead the efforts towards greater financial inclusion
• The collective expertise and experience of the members of the committee is expected to explore issues such as developing viable and sustainable banking services delivery models
• These models will focus on accessible and affordable financial services, developing products and processes for rural as well as urban consumers presently outside the banking network
• It will suggest appropriate regulatory framework to ensure that financial inclusion and financial stability move in tandem
• The Committee will be chaired by Dr. K.C. Chakrabarty, Deputy Governor, Reserve Bank of India and will comprise another 11 members
• The Committee, if necessary, would call other market players like Corporate Business Correspondents, Technology Vendors etc., as special invitees to the meetings

Pic courtesy : Business Standard